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Trinidad Drilling Ltd. announces the renegotiation and extension of long-term, take-or-pay contracts with key U.S. operator

/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES./
TSX SYMBOL: TDG, TDG.DB
CALGARY, May 4 /CNW/ - Trinidad Drilling Ltd. ("Trinidad" or the
"Company") (TSX-TDG and TDG.DB) announced today that it has successfully
renegotiated and extended the terms on 17 long-term, take-or-pay contracts
with one of its key US customers. These changes provide ongoing stability to
the Company's revenue stream during a period of considerable uncertainty.
Trinidad's ability to renegotiate and extend the terms of its contracts
reflects the customer's continued demand for its high-quality,
high-performance equipment and its strong customer relationships.
Trinidad renegotiated the terms on 17 existing long-term, take-or-pay
contracts with a major US oil and gas exploration and development company.
These rigs had existing contracts that were due to expire over the next few
years with an average term of approximately 1.7 years. Following their
renegotiation, the average remaining term is extended to 2.7 years, giving
Trinidad added visibility over a substantial portion of its revenue stream.
In addition to changes in term, dayrates on the contracts were adjusted
to more accurately reflect the current operating environment. The impact of
somewhat lower dayrates will be considerably mitigated by specific reductions
in operating costs that Trinidad has identified and is currently implementing.
Using the new dayrate and operating cost expectations, average gross margin
(on a percentage basis) on the rigs involved is expected to be three to five
percent lower. Trinidad believes that the benefit of guaranteed work over the
contracted period more than outweighs the slightly lower gross margins the
rigs are anticipated to achieve.
The terms of the new contracts came into effect on May 1, 2009.
In addition, Trinidad has agreed with the customer to cancel the
construction of one of the rigs included in the 2009 rig construction program.
This rig, a 16,000 ft Candrill 1500ac drilling rig, was originally scheduled
to be delivered in the second quarter of 2009. Trinidad will keep the
components of the cancelled rig in inventory and utilize them within the
remaining construction program or for repairs and maintenance of existing
equipment.
Following these contract changes, Trinidad will have approximately 45
percent of its fleet under long-term, take-or-pay contract, with an average
term of more than 2.5 years remaining.
Trinidad is a growth-oriented corporation that trades on the Toronto
Stock Exchange (TSX) under the symbol TDG and TDG.DB. Trinidad's divisions
operate in the drilling, well-servicing, coring and barge-drilling sectors of
the North American oil and natural gas industry. With the completion of the
2008/2009 rig construction program, Trinidad will have 119 land drilling rigs
ranging in depths from 1,000 - 6,500 metres and operations in Canada, the
United States and Mexico. In addition to its land drilling rigs, Trinidad has
23 service rigs, 20 pre-set and coring rigs and 4 barge rigs currently
operating in the Gulf of Mexico. Trinidad is focused on providing modern,
reliable, expertly designed equipment operated by well-trained and experienced
personnel. Trinidad's drilling fleet is one of the most adaptable,
technologically advanced and competitive in the industry.
Advisory Respecting Forward-Looking Statements
This news release contains certain forward-looking information and
statements within the meaning of applicable securities laws. The use of any of
the words "expect", "anticipate", "continue", "estimate", "objective",
"ongoing", "may", "will", "project", "should", "believe", "plans", "intends",
"confident", "might" and similar expressions are intended to identify
forward-looking information or statements. In particular, but without limiting
the foregoing, this news release contains forward-looking information and
statements that involve substantial known and unknown risks and uncertainties,
certain of which are beyond Trinidad's control, including the following: (i)
the completion of the rig construction programs on a timely basis and on
economical terms; (ii) the assumption that Trinidad's customers will honour
their take-or-pay contracts; (iii) the ability for Trinidad to attract and
retain qualified crews to crew their rigs; (iv) assumptions respecting capital
expenditure programs and other expenditures by oil and gas exploration and
production companies; (v) assumptions respecting commodity prices, foreign
currency exchange rates and interest rates; (vi) assumptions respecting supply
and demand for commodities; and (vii) other expectations, beliefs, plans,
goals, objectives, assumptions, information and statements about possible
future events, conditions, results of operations or performance. Various
assumptions were used in drawing the conclusions or making the projections
contained in the forward-looking statements throughout this news release.
The forward-looking information and statements included in this news
release are not guarantees of future performance and should not be unduly
relied upon. Forward-looking statements are based on current expectations,
estimates and projections that involve a number of risks and uncertainties,
which could cause actual results to differ materially from those anticipated
and described in the forward-looking statements. Such information and
statements involve known and unknown risks, uncertainties and other factors
that may cause actual results or events to differ materially from those
anticipated in such forward-looking information or statements.
Trinidad cautions that the foregoing list of assumptions, risks and
uncertainties is not exhaustive. The forward-looking information and
statements contained in this news release speak only as of the date of this
news release, and Trinidad assumes no obligation to publicly update or revise
them to reflect new events or circumstances, except as may be required
pursuant to applicable securities laws.
This news release shall not constitute an offer to sell or the
solicitation of an offer to buy the shares in any jurisdiction. The shares
offered will not be and have not been registered under the United States
Securities Act of 1933 and may not be offered or sold in the United States or
to a United States person, absent registration, or an applicable exemption
therefrom.